West Virginia Ratepayers Face Millions in Costs Due to coal Over-Procurement
CHARLESTON, WV – West virginia ratepayers are shouldering approximately $36 million in costs stemming from utility companies’ decisions to purchase and then burn off excess coal, according to an assessment by Kunkel. This over-procurement strategy, intended to avoid exceeding on-site storage limits, resulted in meaningful financial losses for the companies, estimated by Kunkel to be around $66 million in ancillary losses.
The situation highlights a shift from previous years when the Public Service Commission (PSC) criticized the same companies for insufficient coal stockpiles, leading to reliance on purchased power from PJM.
In a recent filing, the companies had requested a total of $641.7 million in rate increases. This included $552.9 million for costs incurred but not reimbursed between March 1, 2021, and February 28, 2023, and an additional $88.8 million for forecasted costs from September 1, 2023, to august 31, 2024.
though, the PSC ultimately approved only $321.1 million in Energy and Natural Gas Cost (ENEC) recovery over a 10-year period.This translates to an annual collection of roughly $32.1 million, or an estimated $2.50 monthly increase for residential customers. The PSC’s January 2024 order specifically addressed the companies’ reliance on purchased power from PJM,deeming them responsible for a portion of the initial $552.9 million ENEC request.
Kunkel’s analysis suggests that had the companies avoided over-procuring coal, ratepayers could have been spared these additional expenses. The practice of burning down excess coal was a direct consequence of contracting for more fuel than was economically viable to utilize within the review period, driven by the need to manage inventory levels and prevent exceeding maximum storage capacities.
